The Newest Tech Start-Up Billionaire? Donald Trump

From the New York Times, I'm Michael Barbaro. This is The Daily.

Yes.

Do you go by Matt?

I go by Matt. I go by Matt. You're a Matthew byline. Because my mother likes me using... Oh, is she?

This is literally the tale of.

Yes, yes. The way all journalism sort of starts, you know? Yes. Why did you go into journalism to begin with, though?

Right. You could have been a doctor. Here we are. At least use my name. Right.

Okay. So as we sit here...

11.

On Wednesday. It's trading right now for around $65 a share. Mm-hmm. If you work that out, it's worth about $8 billion. That's huge.

I think the New York Times is like around $7 billion.

It's bigger than a lot of companies, you know, which is crazy when you think about it.

Yeah. And what is Donald Trump's personal stake in that, and what is that now worth?

Okay. So he owns 79 million shares. So, roughly, doing the math, and this changes, it's somewhere around $5.6 billion. Wow. And going up sometimes as high as even $6 billion.

That's extraordinary.

That is extraordinary, because if you believe what Forbes had said last fall, he was worth about $2.

And not a moment too soon, right? Because, as we've talked about on the show, Trump owes about every last cent of cash he has. I think it's an estimated $500 million or so to various courts, and this would be very auspicious timing to suddenly have an extra $5 billion in his life.

It's a critical lifeline for him right now. There, of course, are limitations to how he can tap that money. But I think also it should not be understated, it's a huge bragging point for him. Right. I mean, if you look at Joe Biden, which he likes to go out and talk about being the most successful businessman on the planet, he can say, look, I built a company that's worth $7 billion overnight.

Or where have you done that? pretty much almost anyone other than a very select, rarefied group of tech startups?

Absolutely.

So tell us the story of how this company, which I think a lot of people candidly dismissed from the beginning as Trump's little kind of renegade corner of the Internet, somehow became this, a real financial behemoth. in a way. What is that story?

So you have to go back to January 2021.

And not just Twitter, right?

Facebook, Instagram. Yeah, he was kicked off everything. But Twitter was really where he had lived, as we all knew. Right.

Tens of millions of followers.

Tens of millions. So Trump is at this low point. He's out of the White House. He's sort of down there in Mar-a-Lago. And all of a sudden, a blast from the past.

I'm no dummy. No, I know.

You know, I know. They're not particularly notable or famous people. I don't know if the word is stars on the show. To be perfectly honest, I want to see Mr. Trump as much as possible.

And what exactly is their pitch to him?

Their pitch is basically, forget about Twitter. Forget about all these other platforms. Create your own platform. Create your own social media company. It will be great.

What was Trump's response?

Well, he's intrigued. But he never really totally commits to anything. At that point, Trump is sort of taking a backseat on it. He's basically agreeing to lend his name, if nothing else. Right.

So, if I'm understanding this plan correctly, the Apprentice guys envision a plan where they go off, they find a SPAC that has raised a bunch of money, and eventually it will merge with the Trump social media company. they envision building. And when that marriage is consummated, their work will be over, and they will hopefully have a lot of money.

Basically, that's exactly what their goal was, yeah. So, the Apprentice guys are out there in the market looking for a SPAC. But, given the lack of really any kind of business plan, they don't go to the top-flight guys out there. They end up at the bottom of the barrel. And so, they end up with, essentially, a very no-name-sounding SPAC called Digital World Acquisition Corporation.

So, this is turning out to be a pretty big mess.

Very big mess. It looks like this deal's never going to happen. And finally, when they launched Truth Social in early 2022, it's a little bit of a joke. It's like this sort of very early version of Twitter, when it's sort of clunky.

How clunky? You were on it?

Yeah, I actually think I was one of the first people to get in. Which I thought was sort of funny, because I said I was from the New York Times. They actually verified me.

Mazel tov.

There was very little traffic. You'd post something, and you could literally hear the critics.

Trump never posted on Truth Social, the site that exists for his….

And I remember writing a story, and you couldn't get an answer from them. Why is he not posting?

Perhaps because he has his own doubts.

And also, it wasn't a place…. no one was there. I mean, they had a few million users. There's like a few million dollars in advertising on Truth Social. A lot of them the equivalent of almost late-night TV advertising that you would see.

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It feels very squishy, but in a good way.

So, but how is it that things start to turn around for this real mess of a social media company that Donald Trump has founded?

Okay, so, the single biggest thing was, last summer, the SEC settles its investigation with Digital World, with the SPAC that it was merging with. And that, basically, at that point, sort of clears the gates for them to start to really move forward with the merger.

What kind of settlement was it?

They had to pay $18 million, and they had to rewrite all their disclosures to make it consistent to reveal all the early talks they had had with Trump. media. Got it. The other thing is, Elon Musk buys Twitter, now X, and one of the first things he does is he says, Trump, you can come back. Start posting again.

As investors.

As investors. Because there were many points where the SPAC deal itself could have just failed. But they really want to make sure this company succeeds. It's almost like a religious kind of thing for some of them, and I can tell you one guy who's been very vocal is actually sort of a Christian minister.

Good evening, DWAC stock.

He has his own streaming video show on Rumble, which he called DWAC'd Live, named after the shares.

Lord, we ask in the name of Jesus.

that you help the executives finish this strong.

and that you protect them from all the forces that would try to stop the merger.

Where they talk about the stock and the merger, and it's got its own following. Just all, show up at Mar-a-Lago, knock on the door and be like,

Hey, President Trump, we'd like to come party with you.

because we all own little bits of your company and we love you. Let's just check on the price one more time.

before we head out for the night.

So, in some way, Trump really owes a lot to his small shareholders who made this possible. Because if it wasn't for them, there would be no merger.

And when they talk to you about why they have bought shares in this business, in this SPAC, even when it's at its least successful and most imperiled, how do they talk about why it's worth their hard-earned money?

First of all, they view they're building something. And they've all believed that, right or wrong, whatever you may think about it, that Truth Social is free from censorship that allows Trump and others to say what they want. And they really believe that, as founding principles, they're the original owners, essentially, going to be, of this company and they're helping it flourish and build. So this has become a real personal thing for a lot of them, more so than I think I've ever seen with any other publicly traded company before.

So the folks who are investing in this SPAC, anticipating it, will eventually get together with Truth Social, and who, as you have just said, sustain this through its darkest chapter, they aren't really there because they see this as a highly profitable business. You just said, Matt, that it was losing money. They're doing it as a statement, and, I guess, a measure of their fervor for Trump, for the movement he represents. Buying the stock is a way for them to put their money where their mouth is when it comes to MAGA.

Right, right. For them, this is about supporting Trump and supporting this company, which they view as critically important, and keeping its message out there alive.

So, Matt, I think that more or less brings us to this week, right, when this turnaround you're describing results in this crazy takeoff of the stock price. But just walk us through the mechanics of it.

What happened was, there's the shareholder vote, and the way it works is, digital world. shareholders have to vote to approve the merger with Trump Media. At this point, it was a foregone conclusion, but it's a vote, so you never know what's going to happen. They get the vote on Friday. It's overwhelming.

A landslide.

A landslide, yes. Like, an electoral landslide. So, the deal goes through. On Monday, the deal is actually closed,

Donald Trump.

Donald J. Trump. Former President. Donald Trump's newly merged social media company has begun trading, and shares are soaring. It opens for trading at around 40-something dollars a share.

And currently, take a look at where shares are. They're up about 40%.

At one point, it reaches $70 a share.

This is the highest profile SPAC we've seen in quite a while. Really, I'd say ever, Katie.

And on the end of trading on Tuesday, it closes around $60 or so. And that's how we get this $7-$8 billion valuation for the company. And the paper gain of $5.6 billion. For Trump. For Trump.

I just want to make sure I understand why this company is now valued so highly. And I guess what I'm really getting at is, is there an actual business case for it, given what folks in your calling would describe as the fundamentals of the business? Or is this just a measure of these Trump-supporting investors' deep affinity for him? Is this basically a bubble? Or is there maybe a true financial justification that can be laid out here?

Okay, so if we go pure fundamentals, it's crazy. This company is not a $7-$8 billion company. It had $3.3 million in revenues for the first nine months of last year. It lost about $49 million.

Yeah, that is not the makings of an $8 billion valuation company.

No, no, no. I mean, the one good thing it got going, it got $300 million in cash from this merger. Not for Trump, for the company. So that's good. They can use that cash to go out and buy something, bring in more people, hire influencers on Truth Social.

Right. And just to remind people, those were stocks where retail investors were buying shares, it felt like, because they wanted to send a message, largely anti-establishment message. They were mad at a hedge fund that had shorted it, in one case, I remember. They wanted to make a point. They wanted to stick it to the man.

And also, it becomes a self-fulfilling prophecy. It becomes a mania. Then others sort of see this and get in, because you feel like if you keep buying, it's never going to fall. It's never going to go down. And that can work for a while, but eventually gravity will always take hold at some part.

I'm really curious how Trump's position in this presidential campaign factors into what you just described, because it feels like this irrational exuberance has to be linked somewhat to the reality that he is the now lead candidate in the polls for re-election. But I'm curious what investors think about that, how they link his chances of becoming president with the financial, health and future promise of this company.

It's definitely, I think, going to be a barometer, sort of Trump and his political fortunes. I mean, just by way of example, the SPAC stock started to soar this year when Trump was on the verge of locking up the nomination. It was around the time DeSantis dropped out in New Hampshire. The stock surged like 60-70% overnight. It was really because people were like, hey, Trump is going to be the nominee, and we're going to be going forward.

But can you just explain that? What does one have to do with the other?

In theory, it doesn't have anything to do with it, but it's like a proxy for him. It's also the idea that, as long as Trump is still politically viable, Trump media is viable. Trude Social is viable.

And presumably a president 2.

If he wins, I think it probably will be a high watermark for the stock. And I would just think, given the dynamic with the election right now, it's hard to see the stock not continuing to rise, at least until November.

Okay, I want to turn now to Trump's access to this very valuable stock at a time when, as we all know, he seems to need money. How and when could he tap into this money?

Okay, so at the moment, he actually can't.

Can't.

He can't. There's what's called a lockup, a restriction. It's not just for him. It's for any major shareholders. They can't sell for six months.

So, if Trump really wanted to, he could find a way, working through this board of loyalists, to tap into this money pretty quickly, if he so chose to.

If he asked the board to do it, I think there's probably a good chance the board would do it. But if he doesn't really need the money that desperately, I think he probably won't. And I think the board would be reluctant because it doesn't really help anyone to have lots of stock coming out into the market. That only will probably depress the price of the share.

And it doesn't help to have the face of the company, the man whose initials are on the ticker, selling the stock, because that suggests he doesn't have a tremendous amount of faith in the business and that might trigger a sell-off, which would undermine the value of the rest of his stock. It's a pretty bad cycle to start.

That's like the event that starts to send the sell-off. And even at that point, even your most loyal shareholders may say, well, I don't want to be left the last one holding the bag.

Right. I want to step way back for just a minute and think about the larger meaning of what has happened with Truth Social. I mean, I've covered a lot of Trump's businesses through the years, investigated them when he was a candidate in 2016,, and it really strikes me that of all the businesses he's been in, real estate, casinos, Trump University, selling Trump steaks, Trump wine, whatever, those made money. This in some ways feels like the least sound business of all. And yet it has made him the richest by far.

It is weird. I'm not a politics reporter, but from a business perspective, this has given me a little bit better insight into his seemingly unending kind of popularity and support.

Well, Matt, thank you very much.

Thank you for having me.

When the stock market closed on Wednesday afternoon, shares of Trump's new media company reached $66, a share, up 14% from the previous day. As of this morning, the company is worth $9.4 billion.

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